Branch consolidation could challenge Wachovia in Ga.
By Fred Tannenbaum
From the February 14, 2003 print edition
CHARLOTTE — Observers say a big challenge awaits the Wachovia Corp. merger in Georgia, where the new bank will have to consolidate large numbers of Wachovia and First Union Corp. branches.
The transition isn't scheduled to begin until late February but training already is under way, Wachovia spokespeople say.
The first actual merger of branches in the marriage between First Union Corp. and the old Wachovia has been completed — to generally good reviews — in Florida. But observers note that circling Wachovia's next consolidation is a hungry SunTrust Banks Inc., which made an ultimately unsuccessful hostile bid for the old Wachovia shortly after the merger was announced.
In Florida, just 60 of of 650 branches were branded Wachovia. It was less a consolidation than a change in name for the Florida franchise.
Georgia will be different with 145 First Union and 138 Wachovia branches. In metro Atlanta, First Union has 61 branches and Wachovia 66.
Chief Financial Officer Bob Kelly told the Salomon Smith Barney Financial Services Conference in New York this week, no customers in any of Wachovia's states will have to change their personal ID numbers and very few, if any, will have to change their checks. The bank is spending about $1.5 million in training to make sure that the transition goes well..
"Our Georgia people are absolutely focused on making that work well." Wachovia now is Georgia's largest bank, he says.
Bob McCoy, co-head of merger integration for Wachovia, says, "The challenge is different, not tougher. The big difference is that in Georgia, there is more legacy Wachovia volume, more legacy blue accounts, more legacy blue checks, more legacy blue everything."
McCoy says the Florida consolidation involved much more than converting old Wachovia branches. All 650 branches received new equipment, including personal computers, a first in old First Union branches. Signs with Wachovia's new logo went up.
"It was a wonderful test case," he says. "We came through because we trained and trained."
The computer systems in place in Georgia can handle the volume, McCoy says. They've been tested repeatedly with realistic scenarios and performed well each time.
Steve Johnson, an Atlanta bank consultant with T. Stephen Johnson & Associates, is confident of Wachovia's execution. He points out that Wachovia's Georgia president, Gary Thompson remains in place, and integration co-head David Carroll is a former Georgia president.
"I've been astounded as to how well the integration has gone in other places," Johnson says. "There's very little fallout. I've seen what those integrations can cause. I think they'll do fine."
Ken Thomas, a Miami-based, independent bank analyst, says he expects SunTrust to try to win over Wachovia customers and ratchet up its advertising.
"This is their home turf," Thomas says. "They're going to try to recoup customers and woo them away if the customers are going to be disgruntled."
He expects few customer defections unless people get fed up with Wachovia during the transition. Still, he expects the competion to be fierce
"This is their only chance to get business out of the deal," he says of SunTrust. "It has to be guerilla banking."
SunTrust spokesman Mike McCoy says the bank won't discuss any specific strategy.
Fred Tannenbaum writes for the Charlotte Business Journal, as sister publication.
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